Major international regulation and global standards
European Sustainability Reporting Standards (ESRS)
Scope: EU | Regulator: EFRAG/EC | Industry: All | Subject: Disclosure | Publication Date: June 2023
The ESRS set out the requirements for undertakings to report on sustainability-related impacts, risks and opportunities under the Corporate Sustainability Reporting Directive (CSRD). The reports should make it possible to understand both the undertaking’s impacts on those matters and how they affect the undertaking’s financial development, performance and position. Two of the twelve Standards are cross-cutting (ESRS 1 on general requirements and ESRS 2 on general disclosures) and the others cover specific Environmental, Social, and Governance topics.
Corporate Sustainability Reporting Directive (CSRD)
Scope: EU | Regulator: EP and Council | Industry: All | Subject: Sustainability | Publication Date: November 2022
This Directive amends the NFRD to introduce more detailed reporting requirements and ensures that large companies and listed SMEs report on sustainability issues such as environmental, social, human rights and governance factors.
European Climate Law
Scope: EU | Regulator: EP and Council | Industry: All | Topic: Sustainability | Date of publication: July, 2021
Regulation setting a legally binding target of net zero greenhouse gas emissions by 2050 and a more ambitious EU 2030 target of reducing net greenhouse gas emissions by at least 55% compared to levels in 1990. It also creates a system for monitoring progress and taking further action if needed and provides predictability for investors and other economic actors.
Regulation 2020/852 on the establishment of a framework to facilitate sustainable investment (Climate Taxonomy Regulation)
Scope: EU | Regulator: EP and Council | Industry: All | Topic: Disclosure | Date of publication: June, 2020
This regulation sets out the criteria for establishing whether an economic activity should be considered environmentally sustainable for the purpose of determining the degree of environmental sustainability of investments. Thus, an exhaustive list of environmental objectives is laid down, as well as a mandate to the European Commission (EC) to create uniform criteria for determining whether economic activities contribute substantially to those objectives.
Non-Financial Reporting Directive (EU) 2014/95 (NFRD)
Scope: EU | Regulator: EP and Council | Industry: All | Topic: Disclosure | Date of publication: October, 2014
The NFRD introduces a requirement for companies to report both on how sustainability issues affect their performance, position, and development, and on their impact on people and the environment. The NFRD is applicable on a consolidated basis to large public-interest entities with more than 500 employees on average, and on an individual basis to public-interest entities that are parent companies of a large group with more than 500 employees on average.
Major industrial regulation
Environmental Taxonomy Delegated Act
Scope: EU | Regulator: EC | Industry: All| Topic: Sustainability | Date of publication: June, 2023
The Environmental Delegated Act contains a new set of technical screening criteria (TSC) for economic activities making a substantial contribution to one or more of the non-climate environmental objectives, namely: i) sustainable use and protection of water and marine resources; ii) transition to a circular economy; iii) pollution prevention and control; and iv) protection and restoration of biodiversity and ecosystems.
Proposal for a Directive on Corporate Sustainability Due Diligence
Scope: EU | Regulator: EC | Industry: All| Topic: Sustainability | Date of publication: February, 2022
This Directive includes the requirements that must be fulfilled by companies to comply with the corporate due diligence duty. The aim is to ensure that companies active in the internal market contribute to sustainability transition of economies and societies by identifying, preventing and mitigating, bringing to an end and minimizing potential or actual adverse human rights and environmental impacts connected with their own operations, subsidiaries and value chains.
Implementing Technical Standards (ITS) on ESG transparency (Pillar 3 ESG)
Scope: EU | Regulator: EBA | Industry: Banking| Topic: Disclosure | Date of publication: January, 2022
Implementing Technical Standards that provide instructions and reporting structure for the disclosure of relevant qualitative information on ESG risks and quantitative information on climate change-related risks, including transitional and physical risks and mitigation measures.
Delegated Regulation (EU) 2021/2139 on technical screening criteria for determining the conditions under which an economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation and for determining whether that economic activity causes no significant harm to any of the other environmental objectives (Climate Delegated Act)
Scope: EU| Regulator: EC | Industry: All | Topic: Disclosure | Date of publication: December, 2021
This Delegated Regulation includes the technical screening criteria for determining the conditions under which a specific economic activity qualifies as contributing substantially to climate change mitigation or climate change adaptation, as well as the technical screening criteria for determining whether that economic activity causes no significant harm to one or more of those environmental objectives.
This Regulation became effective on 1 January 2022.
Amending Delegated Acts to integrate ESG factors into the MiFID II, IDD, Solvency II, UCITS and AIFMD regulations
Scope: EU | Regulator: EC | Industry: Banking and Insurance | Topic: Sustainability | Date of publication: August, 2021
Six amending Delegated Acts with impact on regulations related to MiFID II, AIFM, UCITS, Solvency II, and IDD. These acts were adopted to require financial institutions to integrate sustainability factors and risks into their internal procedures and into their investment advice to customers.
Delegated Regulation (EU) 2021/2178 specifying the content and presentation of information to be disclosed by companies subject to NFRD regarding environmentally sustainable economic activities and specifying the methodology for complying with the disclosure obligation (Delegated Disclosure Act).
Scope: EU | Regulator: EC | Industry: All | Topic: Disclosure | Date of publication: July, 2021
This Delegated Regulation specifies the content, methodology and presentation of information to be disclosed by large financial and non-financial companies on the share of their business, investments or lending activities that are aligned with the EU Taxonomy.
Guide on climate and environmental- related risks (ECB Supervisory Expectations)
Scope: EU | Regulator: ECB| Industry: Banking| Topic: Climate risk management | Date of publication: November, 2020
These guidelines are intended to provide greater transparency into the ECB’s understanding of sound, effective and comprehensive management as well as disclosure of climate-related and environmental risks under the current prudential framework. The Guide establishes a total of 13 supervisory expectations related to: i) business models and strategy; ii) governance and risk appetite; iii) risk management; and iv) reporting.
Regulation (EU) 2019/2088 on disclosure of sustainability information in the financial services sector (SFDR)
Scope: EU | Regulator: EP and Council | Industry: Banking and Insurance | Topic: Disclosure | Date of publication: November, 2019
The SFDR lays down harmonised rules for financial market participants and financial advisers on transparency regarding the integration of sustainability risks and the consideration of adverse sustainability impacts in their processes and the provision of sustainability‐related information with respect to financial products.
Non-Financial Reporting Guidelines: Supplement on Climate-Related Information
Scope: EU | Regulator: EC | Industry: All | Subject: Disclosure | Publication date: June, 2019.
These guidelines should be read in conjunction with the national legislation transposing the Non-Financial Reporting Directive (NFRD, 2014/95/EU) and, where necessary, with the text of the Directive itself.
Directive itself. It aims to provide companies with guidance consistent with the NFRD while integrating the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). As guidelines, they are non-binding, i.e. companies may choose alternative approaches to reporting climate-related information, as long as they comply with legal requirements.